Restaurants are feeling the heat in crackdown on wage theft

* This article originally appeared in the Los Angeles Times on November 18, 2014.

For 56 years, the Chan family has been serving up tasty dim sum dumplings stuffed with pork and shrimp to throngs of business executives, tourists and San Francisco Bay Area families.

The steamed and fried dishes delivered by stylishly uniformed waiters to diners sitting before white tablecloths at their Yank Sing restaurant have won many accolades, including a coveted James Beard Award in 2009 and favorable listings in the Zagat Survey and Michelin Guide.

But Henry and Judy Chans’ Yank Sing restaurant didn’t fare so well last year with state and city labor inspectors. Investigations and audits, spurred by complaints from dozens of employees — mainly Chinese immigrants who spoke little English — revealed numerous violations of state wage-and-hour laws at their restaurant in the heart of San Francisco’s financial district and a smaller location six blocks away.

FOR THE RECORD:

Restaurant wage theft: In the Nov. 19 Business section, an article about restaurant wage-theft cases referred to Shaw San Liu, lead organizer with the Chinese Progressive Assn. in San Francisco, as “he.” Liu is a woman.

What was different about this was that it was more than about the legal back-pay claims. They wanted to push for more meaningful and long-term changes in their workplace. – Winifred Kao, litigation director of the Asian Law Caucus

Regulators said the owners, when confronted with the findings, moved quickly to boost pay and improve working conditions.

Infractions included failure to pay minimum wages and overtime, making prep cooks and servers work off the clock, denials of meal and rest breaks, and managers grabbing tips meant for waiters.

“It was all pretty blatant,” said California Labor Commissioner Julie Su, whose staff led the investigation along with the San Francisco Office of Labor Standards Enforcement. Employers often “do not expect their employees to complain. They believe that it’s cheaper to break the law because the chances of getting caught are slim, and the costs of getting caught are minimal.”

That’s not what happened at Yank Sing, where a few whistle-blowing staffers sought advice from the Chinese Progressive Assn., which advocates for low-wage earners, and the Asian Law Caucus, a nonprofit offering legal aid to the working poor. By the end of summer 2013, most of the restaurant’s approximately 280 employees joined the action. They filed complaints with government agencies and confronted Yank Sing’s management with demands for better pay and conditions.

Yank Sing didn’t fight them. The restaurant said it wanted no part of California’s so-called underground economy, in which scofflaw employers try to get a jump on law-abiding competitors by paying sub-minimum wages, sometimes in cash.

“The family was shocked that they weren’t in compliance and was upset,” said Jonathan Glick, Yank Sing’s director of operations. “They wanted to do what they could to fix things as quickly as possible.”

The Chans blamed their problems on “poor record keeping” and years of “not following correct procedures,” said Glick, a former political consultant brought in to help Yank Sing with a more than $4-million compliance program.

Now they’re determined to do better by entering into a landmark wage settlement and by providing health insurance, paid vacation and other benefits. The deal is scheduled to be made public Wednesday in San Francisco.

The Yank Sing case is the largest of a growing number of aggressive actions against wage theft on the part of community groups and government regulators.

In Los Angeles on Wednesday, Bet Tzedek Legal Services, a nonprofit legal aid group, scheduled an announcement of a settlement with restaurants in the El Mercadito complex in Boyle Heights that will pay $220,000 in back wages to more than 60 workers and provide improved sick and vacation leave.

Later in the week, Asian Americans Advancing Justice-Los Angeles, a civil rights group, said it plans to unveil a settlement of $200,000 in unpaid wage claims for 13 workers with the Izakaya Fu-ga restaurant in Little Tokyo.

Precise data on the extent of wage theft are hard to come by. But an often-cited 2009 report by the National Employment Law Project estimated that 1 in 4 low-wage workers surveyed in Los Angeles, Chicago and New York were not receiving the minimum wage, and 75% were not getting overtime pay that they were owed.

In San Francisco, the Chans’ embrace of wholesale change in their high-end eatery is not your average wage-theft case, where employers often disappear into a maze of new businesses with different names and licenses, said Winifred Kao, litigation director of the Asian Law Caucus.

“What was different about this was that it was more than about the legal back-pay claims,” she said. “They wanted to push for more meaningful and long-term changes in their workplace.”

Xiuzhen Li, 61, a Yank Sing fry cook since 2008, is thrilled with the owner’s new attitude and policies. “The Yank Sing of today has changed a lot,” the immigrant from Taishan, China, said in Cantonese through a translator. “The difference is drastic.”

In the past, Li’s workdays at Yank Sing started at 7:30 a.m. and ended at 6 p.m. She earned sub-minimum wages, no overtime pay, intermittent meal breaks and no health insurance or other benefits. There was never enough time to eat or rest, Li said. “We were racing against the clock.”

The small woman with glasses and rough hands is one of several disgruntled Yank Sing workers who sought help from the Chinese Progressive Assn. in early 2013. Her complaints helped launch a campaign that spurred the Chan family to revamp the way it treated its staff.

“Initially I was afraid because this is my only job, and I was afraid I would lose it,” she said. “It’s not like everything changed overnight, but every time we’d take action, the boss would make changes — every step we took, they took a step with us.”

Now, Li earns $11.25 an hour — more than the current San Francisco minimum of $10.74 an hour. She has time to chat with her co-workers, which makes her happier and more productive. With 15 days of paid time off, she visited China for the first time since starting her job.

She goes home at 4:30 p.m. and can buy groceries, wander the mall and cook dinner for her husband, daughter and son.

Persuading Li and her colleagues to go public with their complaints was challenging, said Shaw San Liu, lead organizer with the Chinese Progressive Assn.

“It was a long process and not an easy one. There were hitches every step of the way,” she said. “Workers have a lot of reasons to not take action; they have a lot of fear. But the employer didn’t launch a legal attack on us and didn’t try to fire workers. They were responsive, they came to the table and did not pull dirty aggressive tricks we often see employers do. With each action, it builds the confidence of the next action.”